- Iron ore Futures in China dropped 6.0% as demand from the largest user deteriorates in April.
- Global growth fears, a firmer USD also weighs on the commodity’s prices.
Iron ore prices on the Dalian Commodity Exchange not only fail to extend Friday’s corrective pullback but also drops more 6.0% while taking offers towards $124.00 heading into Monday’s European session.
The metal’s latest weakness takes clues from the downbeat China trade numbers. “China's April iron ore imports fell 1.4% from a month earlier, official customs data showed on Monday, as overall purchases were impaired by lean demand at mills while the pandemic situation still disrupted shipments,” said Reuters.
Worsening covid conditions in China drown commodity demand from the world’s biggest customer. The latest activity restrictions in Beijing and Shanghai, the dragon nation’s major cities, weigh on investor sentiment and commodity prices.
Other than China-linked demand fears, the broad strength of the US dollar and global economic woes, mainly due to the spiraling inflation and geopolitical tussles between Russia and Ukraine, also weigh on the Iron ore prices. Furthermore, increasing odds of the Fed’s faster/heavier rate hikes also underpins the US dollar, which in turn has an inverse relationship with the iron ore prices.
To sum up, the short-term outlook for the metal remains bearish considering pessimism for China and the global economy, as well as hopes of faster monetary policy normalization. It should be noted, however, that Friday’s US Consumer Price Index (CPI) for April will be crucial data to watch as the Fed has recently rejected odds of heavier rate hikes.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD pressures as Fed officials hold firm on rate policy
The Australian Dollar is on the defensive against the US Dollar, as Friday’s Asian session commences. On Thursday, the antipodean clocked losses of 0.21% against its counterpart, driven by Fed officials emphasizing they’re in no rush to ease policy. The AUD/USD trades around 0.6419.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday during the early Asian session. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold price edges higher on risk-off mood hawkish Fed signals
Gold prices advanced late in the North American session on Thursday, underpinned by heightened geopolitical risks involving Iran and Israel. Federal Reserve officials delivered hawkish messages, triggering a jump in US Treasury yields, which boosted the Greenback.
Runes likely to have massive support after BRC-20 and Ordinals frenzy
With all eyes peeled on the halving, Bitcoin is the center of attention in the market. The pioneer cryptocurrency has had three narratives this year already, starting with the spot BTC exchange-traded funds, the recent all-time high of $73,777, and now the halving.
Billowing clouds of apprehension
Thursday marked the fifth consecutive session of decline for US stocks as optimism regarding multiple interest rate cuts by the Federal Reserve waned. The downturn in sentiment can be attributed to robust economic data releases, prompting traders to adjust their expectations for multiple rate cuts this year.